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TMX Group Inc. statement regarding short sale regulation in Canada

Additional regulation of shorts sales is not required in Canada

TORONTO, May 3 /CNW/ - TMX Group Inc. has stated its position on the current short sale regulations in Canada in a letter to the Canadian Securities Administrators. The letter considers the impact that the Securities Exchange Commission's (SEC) recently published amendments to Regulation SHO could have in Canada.

"TMX Group believes that additional regulation of short sales in Canada is not warranted," said Tom Kloet, TMX Group CEO. "In our view, adopting the recently-amended US rules around short sales would add unnecessary costs to the industry without resulting in a corresponding benefit to investors."

Analysis of trading activity during the recent financial crisis has shown that Canada has not experienced the degree of abusive or naked short selling that other jurisdictions may have experienced. Nor has there been evidence of increasing failed trade levels or other abuses of short selling that would require additional regulation. Further, recent Investment Industry Regulatory Organization of Canada (IIROC) amendments to the Universal Market Integrity Rules (UMIR) short sale rules have enhanced its ability to monitor failed trades and enable it to deal with problematic short selling on a case by case basis. In fact, these findings support TMX Group's view that short sale tick tests can be removed.

Kloet added: "We are confident that the UMIR short sale rules combined with vigilant surveillance and enforcement by IIROC provide protection to our market."